Fraser for Treasury, tasked with ‘thorough’ review

London-based finance executive John Fraser will take the reins of Treasury next month, tasked with immediately reviewing the operations of the department.

Prime Minister Tony Abbott announced today Fraser’s five-year term will commence on January 15. Former secretary Martin Parkinson left the bureaucracy last week after almost four years in the position.

Fraser (pictured) was first mooted as the man for the job, arguably the most powerful and influential in the Commonwealth public service, in October. One report suggested he needed time to tie up his personal finances.

Fraser heads the asset management group at Swiss bankers UBS. But he spent two decades in Canberra at the pointy end of Treasury.

The 63-year-old Monash University-trained economist was Treasury’s point man in Washington under Paul Keating and become deputy secretary for a three-year stint in 1990. He then chased the obscene money in the private sector, joining the Swiss Bank Corporation in Australia which later merged with UBS.

In a statement today, Abbott said Fraser brings “significant experience in both the public and private sectors to his appointment”. Treasury Joe Hockey said he’s “well placed to guide the Treasury into a new era”.

Hockey also said Fraser has been asked to conduct “a thorough review of the Treasury’s resources and capabilities”.

As The Mandarin previously reported, Fraser was one of the few executives to keep his job in a post-GFC clean-out at UBS which came to the brink of collapse. He told The Australian earlier this year he was “appalled” at a series of scandals — the Swiss government had to bail out the bank after a series of missteps — and threatened to quit. “I resigned and gave my 12 months’ notice in August 2008 as I was so fed up with the whole situation,” he said.

He stayed, but the reputation of the bank didn’t improve. The New York Times noted in 2012 the bank’s “series of immunity, nonprosecution and deferred prosecution agreements” and “record of recidivism”. As one senior economist (who didn’t want to be named) told The Mandarin, UBS has an “appalling history” as “probably the most consistently criminal of the major banks”. Nevertheless, it has recovered to become a global leader in wealth management.

Saul Eslake was interviewed for his first job at Treasury by Fraser in 1978 and worked under him for a time. “He probably would have been a candidate for the job years ago if he had stayed,” Eslake said.

Eslake was appalled at the treatment of Parkinson — the government made it clear he wasn’t their pick but finally urged him to stay until this year — but believes Fraser is an “inspired choice”.

“There’s no doubt about his capacity to work with and understand the bureaucracy, but he also brings a hell of a lot more,” he told The Mandarin.

Percy Allan, a former NSW Treasury secretary, knew Fraser well during his time in Canberra. He notes his “vast experience” in international finance during the GFC, “which would be invaluable back at Treasury”.

In 1996, Fraser was picked by Peter Costello to head the Howard government’s commission of audit and was an architect of the Charter of Budget Honesty. “Many states have replicated this model,” Allan told The Mandarin, “helping transform national and state elections in Australia from pork-barrelling exercises into competitions about who can offer the most credible fiscal policies.

“John is intelligent, articulate, gregarious, stimulating, humorous and debonair so would make a fine Treasury head. I can’t think of a better choice.”

There are clues on the economic philosophy of Fraser, also chairman of the Victorian Funds Management Corporation, in The Australian interview, where he warned of rising inflation and the danger of “playing” with monetary policy:

“I believe that we are in a remarkably experimental time. I worry about it. I am a traditional economist and if you play with monetary policy, you have to be very, very careful.

“We have been through a period since 2008 of massive expansion in the cash supply and the impact on the money supply has been unusual, to say the least. Only time will tell and, as we know from earlier periods, the impact can take a long time to be felt, both in terms of output and also inflationary expectation.”

Despite differences, the government has paid public tribute to Parkinson’s service. Abbott noted today his “long and meritorious career” and thanked him “for his service to Australia and look forward to his further contribution to our country”. Hockey said in a statement:

“I would also like to thank Dr Martin Parkinson for his outstanding contribution to the public service since being appointed to the Treasury in 1981.

“Dr Parkinson has been a loyal servant of the Australian people. He has utilised his enormous intellect to pursue and affect significant policy change. He has served the community and the government well through his leadership and insightful advice.”

“Martin Parkinson is a man of great personal integrity. I wish him all the very best for his future endeavours.”

The confirmation of the appointment follows a range of sackings of public sector chiefs by Abbott, including the replacement of Ian Watt with Michael Thawley as secretary of the Department of Prime Minister and Cabinet in October, Chris Moraitis taking over as secretary of the Attorney-General’s Department in September and Jane Halton replacing David Tune at Finance in June.

Jason Whittaker is managing editor of The Mandarin based in Melbourne. He has written for and edited political, business and culture publications for a decade. He spent two years as editor of sister Private Media publication Crikey.

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